What is the average cost to set up an LLC?

10 comments on “What is the average cost to set up an LLC?”

1. When you stated “If your business is 100% digital and you don’t have any US presence”, what is considered digital? I am looking into ecommerce sells so I will not have a physical store. I anticipate getting items shipped to my home address and then shipping out to others via mail across the country. We are military and move frequently.
   I am hoping to minimize annual fees so should I start the LLC in the AZ where I live now even though we do not pay AZ taxes? We are residents (with drivers licenses) in SD. Thank you!

   • Hi Laurie, LLC filings are a bit challenging if you move often because of how the state laws work regarding “doing business” and the authority to do business. You may want to consider forming an LLC in your “base state” of South Dakota. Then you can register your South Dakota LLC as a foreign LLC where you are doing business; in Arizona. If you move to another state, you’d withdraw that foreign LLC qualification in Arizona and register the LLC as a foreign LLC in the next state. Hope that helps.

     • Or could I just establish my LLC in AZ and avoid South Dakota altogether? It would be cheaper that way (only having the original Llc) and I’m not doing business in SD because we aren’t living there. My only concern is we pay taxes to SD for our military pay. Would we pay taxes for our LLC to AZ? Thanks so much for your input!

       • Hi Laurie, yes, that is also an option. Most likely, you would apportion your income among different states, however, I can’t say for sure. I recommend speaking with a few accountants. Thank you for your understanding.

2. I am starting an LLC with someone from Idaho. I live in Texas. The business will essentially have 2 physical addresses, 1 in each state. To make things more complicated, we will be bidding on government call-when-needed contracts that could order our assets for temporary work in any state. Would it be appropriate to simply set up the LLC in Idaho?

   • Hi Derrick, sounds like you’ll be doing business in both states. In that case, you may want to consider forming a domestic LLC in Texas ($300) and then registering as a foreign LLC in Idaho ($100). If you were to go the other way around and form a domestic LLC in Idaho ($100), the foreign registration in Texas is $750. Hope that helps save you some money.

3. Hi Matt,

   I live in NJ but own rental apartments in TN. I wanted to create individual LLCs for each unit.

   Do I to open up individual LLCs for each apartment in TN or can I register them in NJ?

   • Hi Jay, since you’re doing business in Tennessee, the LLCs that own the properties need to either be formed as Domestic LLCs in TN or registered as Foreign LLCs in TN (this is where the LLC is formed in NJ but registered to do business in TN). Another options is to form the LLCs in TN but instead of you owning them personally, they are owned by a parent LLC, say formed in NJ. Some investors form the parent company in Wyoming for better asset protection. And something else to consider is a Series LLC in TN. This will reduce the formation costs and still offer asset protection. However, Series LLCs are relatively new and tax law and liability cases are still evolving. With all those options, we strongly recommend speaking with a few real estate attorneys about how to best structure your setup. And here’s a related article: Domestic LLC vs Foreign LLC. Hope that helps.

4. What about trucking and shipping companies that transport goods to many states. Could an LLC operate out of one state and service many without encumbering taxes across many states? Basically I’m asking if there is an advantage to one state over another when transporting across state lines with drivers living in more than one state? Is there an advantage to picking a specific state as the base of operations to work out of and distribute loads?

   • Hey John, apologies it took me a while to get to your reply. I’d say unless you’re actually going to have a REAL physical presence in a particular state (like an actual office, staff, real business, etc.), there could be more risks to going outside of your home state. I’d ask yourself:

     Where do you reside?
     Where do you pay state taxes?
     Where do you receive your income? Where are payments mailed and/or in what state was your bank setup?
     What state is you vehicle tagged/registered in?
     Where do you return to between hauls?

     And to answer your question about taxes, generally no. If you haul through certain states often you usually have reporting and filing requirements in that state. An accountant familiar with the logistics industry should be able to help you identify where and what you need to file. Most people in your industry form their LLC in their home state; the state where they reside. People have run into issues when they go out of state, but aren’t actually doing business there. Things like some owner-operators being audited by DOT/FMCSA compliance officers at their place of business, as well as “office” (whether an actual office or home) inspections done by state DMV compliance officers. There have also been known cases of states going after revenue (and imposing penalties and fines) on residents who form their LLCs out of state. Hope that helps!

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